Clause 42.—(CO-OPERATIVE HOUSING ASSOCIATIONS.) (Hansard, 23 May 1963)

§ Mr. G. R. Mitchison (Kettering)
May we be told by the Government the object of the Clause? I think that I can see it.

§ The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. F. V. Corfield)
The Clause provides relief from tax for cooperative housing associations approved under the Clause by the Minister of Housing and Local Government, the Secretary of State for Scotland or the Minister of Health and Local Government for Northern Ireland, as the case may be. It provides, in effect, that associations are to be treated as collective owner-occupiers—that is, they will not be liable to tax on rents which they receive from their members, and interest paid by the association is to be treated as paid by the members in shares proportionate to their rents.
The relief, therefore, is twofold. In the first place, the association will not be charged with Income Tax or Profits Tax on the rents which it receives from its members. In the second place, each member will be allowed relief where appropriate on as much of the interest paid by the association as is attributable to the property which he occupies. The association, of course, remains liable to tax in the ordinary way on income from invested funds and will be treated as itself paying any interest attributable to unlet properties. The basis of the scheme is complete mutuality between membership and tenancy.

§ Mr. Mitchison
I am obliged to the hon. Gentleman for that explanation. This seems to remedy a foolish part of the law, and in that spirit we are glad 657 to accept it, noting that there is a hypothetical rent in the middle of it.